GE Money, the consumer financial services division of US
conglomerate General Electric (GE), is continuing its impressive
growth story. According to GE’s 2007 annual results, published in
January, GE Money reported the fastest revenue growth of GE’s six
business segments – it grew 31 percent last year, followed by GE
Infrastructure (22 percent), GE Commercial Finance (14 percent), GE
Industrial (9 percent), broadcaster NBCU (6 percent) and GE
Healthcare (-3 percent).
GE Money, which has $200 billion in
assets, ended 2007 as the third most important unit in terms of
revenue contribution to GE: for the fourth quarter its revenue was
$6.58 billion, compared with GE Infrastructure’s $17.34 billion and
GE Commercial Finance’s $9.32 billion.
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It has not been all plain sailing: the company exited Japan’s very
difficult consumer finance market last year and sold most of its US
mortgage unit, WMC, for a loss. It has taken a hit from the
collapsing credit environment in the US – while global
delinquencies in 2007 remained largely stable at 5.3 percent, down
2 basis points, US delinquencies were up 59 basis points to 5.52
percent.
A drop in relative group contribution
Troubles in the US mean GE is forecasting that, for the first
quarter of 2008, GE Money’s revenue will grow by around 5 percent
year-on-year, a drop in relative contribution to overall group
revenue for the first quarter of 2008 of around 20 percent.
GE announced at the end of last year that, given the wholly awful
credit conditions in the US, it was considering selling part of its
private-label card portfolio (see RBI 584). “I think we
could partner or exit in private-label credit cards,” GE’s CEO Jeff
Immelt said. GE Money’s private-label programmes encompass several
large-scale US merchant card portfolios, such as Wal-Mart, eBay and
Gap. GE Money, Citi and HSBC own just over 80 percent of US
private-label retail card receivables, up from 68 percent in
2003.
But the decision to possibly sell such a significant division of GE
Money is par for the course, a hallmark of GE’s famous,
ever-roaming focus on profits and growth.
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By GlobalDataAt the start of February, GE Money announced it was relocating its
headquarters from the US (the state of Connecticut) to London. It
also promoted London-based William Cary, formerly head of GE
Money’s EMEA region, to president of GE Money – a sign, said the
company, of how ‘global’ GE Money’s current business aspirations
have become.
Three-quarters of GE Money’s business is now sourced outside the
US. In the fourth quarter of 2007, GE Money reported an 18 percent
rise in overall assets – of this, $10 billion came from Europe, $4
billion from the US and $2 billion from Asia. While the unit
recorded an overall 7 percent rise in profits, European and Asian
operations reported double-digit profit growth while US profits
fell 59 percent.
“As the leader of GE Money’s business outside the US, Bill [Cary]
has shown a great eye for growth, business discipline and strong
leadership,” Immelt said in a statement issued on 7 February.
“Given his experience in global markets, and his strong financial
expertise and experience, Bill is the perfect GE leader to drive
change and growth at GE Money.”
One of the more interesting aspects of GE Money’s forward strategy
is its focus on environmentally skewed products. One of the big
launches last year was the GE Money Earth Rewards card in the US
(see RBI 582); the group has
also just launched what it says is the first environment-focused
card in Australia.
The new green twist at GE Money is part of GE’s ecomagination
project which, according to the company, provides products that
offer “significant and measurable environmental performance
advantages to customers”. ecomagination projects contributed $14
billion in revenue in 2007; forecasts for 2008 and 2009 are $16
billion and $20 billion.
